RadioShack Talking With Major Supplier to Ease Restructuring

RadioShack Corp., the electronics retailer trying to avoid bankruptcy, said it’s holding talks with a “major vendor” that could help the company restructure its finances.

The negotiations involve some of RadioShack’s largest creditors, the Fort Worth, Texas-based company said in a regulatory filing. While no agreement has been reached, the talks are continuing, the retailer said.

“The company continues to explore how to optimize its various commercial relationships,” RadioShack said. “There can be no assurances that any such discussions will result in modifications to the company’s commercial arrangements.”

RadioShack, with its cash dwindling, has been working to bolster its balance sheet and revamp operations to better compete against e-commerce rivals. RadioShack warned this month that it could be forced to seek bankruptcy if the efforts fail. On Sept. 11, the company said its second-quarter loss widened to $137.4 million and comparable-store sales dropped about 20 percent.

“I take this as a very bad sign,” Anthony Chukumba, an analyst at BB&T Capital Markets in New York, said today in an interview. “They said, ‘We want better terms so we don’t have to go bankrupt,’ and the vendor said no.”

He has a hold recommendation on the shares.

RadioShack rose 0.4 percent to 91 cents at the close in New York. The shares have lost almost two-thirds of their value this year.

Potential Rescue

Standard General LP, a major shareholder, is working with UBS AG to assemble a rescue-financing package that would give the retailer the means to stock up on holiday inventory, Bloomberg reported earlier this month. RadioShack had $30.5 million in cash and equivalents as of Aug. 2.

Chief Executive Officer Joe Magnacca is revamping merchandise and stores to make the retailer a destination for more than just gadgets and better position it against Wal-Mart Stores Inc. and Amazon.com Inc.

RadioShack is boosting the number of private-label and exclusive products, expanding its in-store repair program and testing a ship-from-store option. Magnacca also is pruning costs and announced earlier this year that he intended to close 1,100 locations before some creditors blocked the plan, restricting closings to 200 a year.